TaxTMI 
TaxTMI 
TaxTMI 
2019 (2) TMI 202
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....uded the service tax. The appellants availed credit of the service tax paid by TVSFS being input services provided for them. The department was of the view that the appellants are not eligible for the credit on such services (BAS) as the services did not qualify as input services for the appellants. Show-cause notice was issued proposing to disallow the credit and to recover the same along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand of Rs. 4,39,03,272/- along with interest and imposed penalty of Rs. 2,000/- under Rule 15 (3) of Cenvat Credit Rules, 2004. Aggrieved, the appellants are now before the Tribunal. 2.0 On behalf of appellant, the learned counsel Shri Raghavan Ramabhadran appeared and argued the matter. He submitted that the appellants, who are engaged in the manufacture of motor cycle thereon sell their products through their authorized dealers in various locations all over the country. The appellants had entered into an agreement with the authorized dealers known as Dealership Agreement on non-exclusive basis for marketing, selling and servicing the products within the territory allotted to the dea....
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.... services forms part of the assessable value of the final products. Since the value of the services forms part of assessable value, the credit availed is correct. He relied on decision of Tribunal in the case of Commissioner of Central Excise, Nasik Vs M/s. Mahindra & Mahindra Ltd., reported in 2012 (28) S.T.R.382 (Tri. -Mumbai.). The definition of "input services" include sales promotion activities also, and, therefore, services availed for marketing or sales of finished goods (motor cycles) is an input service, for the appellant. He relied upon the decision in the case of M/s. Leroy Somer India P. Ltd., Vs Commissioner of Central Excise reported in 2015 (939) S.T.R.466 (Tri. -Del.) and Commissioner of Central Excise Vs M/s. Danke Products reported in 2009 (16) S.T.R.576 (Tri. -Ahmd.). The Hon'ble High Court of Bombay in M/s. Coca Cola India Pvt. Ltd., Vs Commissioner of Central Excise reported in 2009 (15) S.T.R. 657 (Bom.) has held that sales promotion and marketing are activities relating to business of manufacture particularly, when the expenses incurred form part of the product manufactured. 2.2 He relied upon the decision of Hon'ble Apex Court in M/s. RamalaSahakari....
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....earance of final products upto the place of removal, (iii) and includes services used in relation to setting up modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs activities relating to business such as, accounting, auditing, financing, recruitment and quality control, coaching & training, computer networking, credit rating, share registry, security, business exhibition, legal services, inward transportation of inputs or capital goods and outward transportation upto the place of removal; 6. The appellants entered into an agreement with TVSFS to arrange finance/disbursement of loans to customers, who purchase two wheelers manufactured by appellant. Within the premises of dealers necessary infrastructure was set up by TVSFS to facilitate the disbursement of loans. The fact that TVSFS has paid service tax under Business Auxiliary Services for such activity of arranging and disbursing loans is not disputed. The allegation of the department is that such activity carried out by TVSFS does n....
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....e manufacturer of final product. In the above decision, Tribunal had disallowed credit on services availed for storing inputs (ammonia) in storage tanks taking the view that the definition speaks about only those services availed for procurement and inward transportation of inputs and not storage of inputs outside the factory. The Hon'ble High Court analysed the issue and held that manufacturer was eligible for credit of services availed for storing inputs outside factory. The relevant portion reads as under: "5. Now at the outset it must be noted that Rule 3(1) allows a manufacturer of final products to take credit inter alia of Service Tax which is paid on (i) any input or capital goods received in the factory of manufacturer of the final product; and (ii) any input service received by the manufacturer of the final product. The subordinate legislation in the present case makes a distinction between inputs or capital goods on the one hand and input services on the other. Clause (i) above provides that the Service Tax should be paid on any input or capital goods received in the factory of manufacture of the final product. Such a restriction, however, is not imposed in regard t....
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....s Rule 3(1) allows a manufacturer of final products to take credit of excise duty and Service Tax among others paid on any input or capital goods received in the factory of manufacturer of the final product, insofar as any input service is concerned, the only stipulation is that it should be received by the manufacturer of the final product. This must be read with the broad and comprehensive meaning of the expression 'input service' in Rule 2 (1). The input services in the present case were used by the appellant whether directly or indirectly, in or in relation to the manufacture of final products. The appellant, it is undisputed, manufactures dutiable final products and the storage and use of ammonia is an intrinsic part of that process." 9. The 'means part' of the definition is followed by an 'inclusive' part. The inclusive part of the definition mentions services of advertisement, sales promotion and market research. These services are absolutely necessary for sale of goods of any manufacturer. Advertisements help to reach out to the customers. Sales promotion and market research helps to plan strategies of manufacture as well as for improvement of the p....